When an emergency happens, borrowers naturally want to find a solution that’s appropriate and safe. Unfortunately, there are a lot of predatory, high-risk loan lenders out there—and their top priority is putting vulnerable borrowers in even more difficult situations just to make a buck.
While we can’t wave a wand and make all of the predatory lenders disappear, we can let you know what to look out for as a borrower.
Are You Getting the Full Picture?
1a. They Make Claims That You Know Aren’t Possible
Some companies believe that borrowers are pretty gullible and will flock to them if they make awesome promises. But putting your critical thinking cap will help you sort what’s realistic from what isn’t. For example, is the claim that getting a loan will dramatically improve your credit score make sense?
Without a doubt, financial contracts and financial decisions are significant. It’s not like choosing between being a shoe or a car in Monopoly. Any agreement that you make has the potential to significantly impact your life in a way that is positive or negative.
So, when making these significant decisions, it is crucial that you have the whole enchilada of information on your plate. High-risk loan lenders won’t want you to have all the information on your plate. They know that if a borrower truly knew what the terms in the contract entailed, there’s a high chance that no agreement would be made.
That’s why high-risk loan lenders choose to keep a lot of information under wraps. For example, it’s not uncommon to get hooked by a super low rate… and then find out during the repayment process that there are extra fees or the rate suddenly skyrockets without warning. Additionally, some bad for business lenders push vulnerable borrowers into plans that aren’t appropriate and lead to negative vibes all around.
1b. Ask Questions
In order to avoid those outcomes, don’t be afraid to ask specific, targeted questions. If you feel like a payment plan that they claim is the best is not right for you, ask for something different. Ask about the associated fees. Ask about what happens if you have difficulty with repayments at some point. Listen carefully to their responses. If you get something vague or nonsensical, move on immediately.
Additionally, if you get far enough into the process to see a contract, you should spend some time looking it over. Listen to what a representative has to say about what the contract says, and then have your own look. We know that legal language can be hard to decipher, but doing so will put you in the safest position. What if you found a clause that stated if you were late to make a payment by a day, you’d be charged a couple hundred dollars? What if wording in the contract implied that borrowers must make a significant extra final payment in order for a piece of collateral to be returned? You need to know.
Knowing the ins and outs of the contract is a line of a defense. If you choose to work with a company and then they do something that violates the contract, you have cause to take action and fight the unscrupulousness.
Do Some Quick Research
2a. Look into the History of the Company
In school, chances are teachers told you that history matters. It’s true. When it comes to companies that are high-risk loan lenders, they tend to leave a distinctive pattern in their wake. For starters, try Googling the name of the company. Are there pages and pages of bad reviews and negative experiences? Do they have an active social media presence? Or is it just missing altogether or have low engagement? While you shouldn’t dismiss a company just because it doesn’t have the same number of Twitter followers as Taco Bell, seeing the way lenders publicly interact with their peers in the financial industry is important.
Though, it may be difficult to properly search for a company just based on the name of the website. It could technically be under a different name, so pinpointing the exact name of the company is essential and possible when looking over a contract. Or ask a representative, and see if they’ll give you a straightforward answer. Either way, you have the ability to sort high-risk loan lenders from those that are looking out for your best interests.
If you’re on the fence about pursuing a loan, it doesn’t hurt to ask to speak to previous borrowers. It might not be possible or you might be directed to individuals who don’t accurately represent what most borrowers experience with the company, so take it with a grain of salt.
2b. Research Government Regulations for the Loan You’re Considering
It can also be helpful to see what rules are already in place. The government wants to keep people safe, so they’re not victims of predatory loan companies. For that reason, there have been rules established to prevent bad lending practices. As an example, there is a lot of predatory lending associated with title loans, and many states don’t allow them.
For the states that do allow them, regulations are put in place. Take Illinois. In that state, the highest APR has been restricted to 36%, along with balloon payments being banned. There are regulations for other types of loans that have a predatory reputation, like payday loans and unsecured loans. Wherever you live and whatever loan you’re considering, there will be information you can use on government sites. If a lender violates current laws and practices, you’ll know in an instant that they’re one of the high-risk loan lenders of the world. For those situations, it makes sense to report the company, so other borrowers in need don’t have to go down a similar road.
Connect with Others
3a. Talk to Your Friends, Family, and Loved Ones
It can be hard to talk to the people you care about when it comes to money matters. Feelings of embarrassment or guilt can come up. But just as you’re struggling with a financial situation, it’s more than likely that someone in your circle has dealt with something similar. They probably went the same route—searched around on the Internet in order to find a quick solution. It wouldn’t be unheard of for one of your loved ones (or even a handful of them) to have come around high-risk loan lenders.
Don’t be afraid to ask and learn about the experiences other people have had. If you’re considering signing a contract with a company, and then you hear about an awful experience a friend had, you can save yourself some worry by just stepping back. Or, who knows, maybe someone in your family had a great experience at a low point in their lives that they would wholeheartedly recommend. You can learn a lot just by talking to those around you.
Plus, when you’re having a hard time, it can just be comforting to surround yourself with people that care about you. Warm, safe feelings can always do a body and soul good.
3b. Use the Government and Other Local Resources
Beyond having websites with information, there are governmental officials who can help you look at information and answer questions about predatory lending. There will likely be people that you can contact when you read about the regulations in your state.
Also, it doesn’t hurt to look into other local resources, like classes about personal finance at your local library. You could become connected to an expert who is experienced with the local landscape of high-risk loan lenders, along with opportunities that have worked for those in a similar situation.
While being in a financial crunch can feel super overwhelming and the need for cash has a looming deadline that doesn’t leave time for research, it can be worthwhile in the long run. There aren’t any absolutes, but as a general guide that’s true so you can avoid making a deal with high-risk loan lenders.
Compare, Compare, Compare
4a. Recognize That There Are a Variety of Different Opportunities
It doesn’t make sense to automatically do business with the first place you find in an emergency situation. That’s not to say that the first place you look at can’t end up being the best option for you, but it’s a smart move to consider all of your options.
In order to do this, get multiple quotes or estimates from multiple lenders. Don’t limit yourself to just lenders you can find online. Perhaps there’s a local place that is simply a gem in the neighborhood. From talking to representatives from multiple companies, you can get a feel for how ethical and how transparent they are, along with if the rates as reasonable and fit your income.
Whether you’re dealing with high-risk loan lenders or a reputable company, it’s a pretty standard practice across the board for everything before an agreement to be free with no obligation. So, by inquiring about rates and possibilities, it isn’t like you’ll have to shell out a ton of application fees.
4b. Standalone Lender vs. A Bridge Company
When gathering quotes and estimates, making the distinction of where it’s coming from is important. In some instances, lenders keep everything in house from advertising to loan agreements. Though, some lenders choose to work with one or multiple bridge companies. These companies seek out borrowers and connect them with lenders based on location and rate.
This distinction is important because you should know what your quote or estimate represents. Is it the best that one singular lender can offer? Or is it the best of several in the area? Put simply, comparing rates gives you the ability to pick and choose with the excellent backing of research. Not to mention, it helps high-risk loan lenders stick out like a sore thumb.
Trust Your Gut
5a. Don’t Give in to Temptation
Ultimately, your instincts can serve you well. If you feel like something is off, it’s likely that something is actually wrong and you’re dealing with one of the many high-risk loan lenders in the world. Maybe it’s an uneasy feeling that you just can’t put your finger on. Still, it’s worth exploring because you’re probably right in the end.
While it can be tempting to just go with an outrageous plan suggested by an untrustworthy lender because it feels like your only option, don’t give in. When you trust your gut and choose to not work with high risk loan lenders, you’re putting yourself in the best position. You’re valuing your personal worth and investing in your future well being by not pursuing a risky situation.
Though, as a note, when thinking about high-risk loan lenders, realize that it would be impossible for a loan transaction to not have some risk. The thing that you need to prioritize and learn is what the company does to minimize risk and give borrowers the highest ability to succeed. A high rate of success and a low risk is what is ideal. In addition, as a person and as a borrower, you know how much risk you can handle in your life, and you should set boundaries that are in alignment. After all, you are the biggest advocate for your own safety and security.
5b. Our Distinctive Service for Quick Cash
We’re spent a lot of time and works talking about what makes high-risk loan lenders risky. The reason is that we understand how tough the environment is for borrowers and naturally want to provide a breath of fresh air. For over 10 years, we’ve proudly helped borrowers with phenomenal service and low-interest rates. As an another great benefit, we always work quickly and transparently, and can provide an estimate in seconds and on the spot cash in 24 hours.
We encourage you to try us out and evaluate us on the qualities we’ve touched on in this article—we know that you’ll find that we’re not one of the high-risk loan lenders of the world.